The dollar is now ceding quite a bit of ground in trading today, reversing the nudge higher after the US retail sales yesterday. It comes alongside a shove lower in Treasury yields. 10-year yields are now down 5.5 bps to 3.871% and that is weighing on the greenback. At the same time, US futures are also looking shaky as S&P 500 futures are also down 0.1% currently.

Going back to USD/JPY, the drop comes as price action stalls at the 38.2 Fib retracement level of the swing lower since July – seen at 149.42.

It’s going to be a tricky session for the dollar to navigate as traders will have to look to themselves to keep up the form from trading yesterday. There won’t be much on the economic calendar to help unlike in the past few days.

Looking to other dollar pairs, EUR/USD is up 0.2% to 1.0990 with large option expiries holding the pair near 1.1000. Meanwhile, GBP/USD is up 0.4% to test 1.2900 and USD/CHF down 0.6% to 0.8675 currently.

This article was written by Justin Low at www.forexlive.com.

• Will make great efforts to enhance the sustained upward trend of the economy
• It is necessary to stick to goals and not to take a relaxed approach
• Need to expand domestic demand more vigorously, focus on boosting consumption
• Will explore new growth points for foreign trade
• To make differentiated policy support based on the needs of different groups of people

Once again, it’s all pretty words and the challenge for Beijing will be to implement all of this on the ground level. That will be what investors are looking for in terms of shoring up confidence. Since peaking in 2021, Chinese stocks have plunged considerably amid the government’s handling of the pandemic and there hasn’t been much to convince of a revival in domestic demand just yet.

This article was written by Justin Low at www.forexlive.com.

• This is not what an overheating economy looks like to me

Given the latest jobs report earlier this month, I don’t think anyone thinks that the economy is overheating. But from the retail sales data yesterday, it’s not that bad either. Anyway, this just reaffirms that the Fed is trying to ease into a pivot to cut rates next month.

This article was written by Justin Low at www.forexlive.com.

There is a bit of a flag pattern forming in gold as price action continues to sit near fresh record highs this week. There was an attempt to breach the key resistance region around $2,475-80 on Wednesday but buyers cooled off after. And after a slight setback, they are quickly turning things around again as we get closer to the weekend now.

As the Fed looks to cut and yields are weighed lower, the simple case is for a bullish argument for gold. That being said, the technicals are another thing. There has been almost no semblance of a pullback since the surging run higher in March this year.

Sure, there was a bit of a consolidation from mid-April to end-June. However, it’s not exactly a retracement of any sort. For some context, gold rose by a little over 13% over the course of 2023. Meanwhile, it is up nearly 20% already in just 2024 currently.

There are reasons to stay bullish in gold in the long-term and also some reasons to expect a pullback from a technical perspective.

But perhaps price action and price patterns make for the simplest argument for gold at the moment.

And that is to go with the break of the flag pattern above. That is either on a topside run above $2,475-80 or a push back lower below $2,400 to threaten the 100-day moving average (red line) near $2,362 currently.

This article was written by Justin Low at www.forexlive.com.

• EUR/USD eyes firmer break above 1.1000 but still anchored for now
• Gold Technical Analysis – Struggling to break a key resistance
• Weekly update on interest rates expectations
• Fed’s Bostic says open to a rate cut in September as inflation cools
• RBNZ expected to cut cash rate by at least another 50 bps before year-end – poll
• UK Q2 preliminary GDP +0.6% vs +0.6% q/q expected
• UK June monthly GDP 0.0% vs 0.0% m/m expected
• Switzerland July producer and import prices 0.0% vs 0.0% prior

Markets:

• AUD leads, CHF lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 2.4 bps to 3.846%
• Gold up 0.6% to $2,461.26
• WTI crude up 0.9% to $77.71
• Bitcoin down 0.7% to $58,725

It was a session bereft of any major headlines as markets are digesting the US inflation numbers from yesterday while awaiting the retail sales data later.

Major currencies are settling into a calmer climate, with light changes overall for the most part. The euro and yen aren’t doing much with EUR/USD settling in just a 13 pips range so far today. Large option expiries may be playing a role there but USD/JPY itself is also little changed around 147.20-30 levels on the day.

The pound is slightly higher as UK Q2 GDP reaffirms some economic resilience while the aussie is up since Asia Pacific trading, buoyed by a more solid jobs report.

Besides that, the risk mood on the day is steadier with US futures sitting marginally higher currently. Bond yields are also just a touch higher with 10-year yields in the US looking to arrest a four-day drop. But it is still early in the day though, as we will have US retail sales data to work through later.

In other markets, precious metals are bouncing back with gold and silver both higher. The former is facing a triple top pattern at around $2,475-80 so it will be one to watch to see if buyers can catch a break before the weekend.

This article was written by Justin Low at www.forexlive.com.

There was a bit of a push and pull after the US CPI report yesterday but Wall Street ended up with a positive close. The Nasdaq was flat though and we’re seeing some light struggles in tech now again. On the other hand, Walmart just reported its Q2 earnings and that was a beat on both EPS ($0.67 vs $0.64 exp.) and revenue ($169.3 billion vs $168.5 billion exp.). Dow futures are up 0.2% currently but S&P 500 futures and Nasdaq futures have turned flat.

European trading featured a more muted tone across broader markets. That puts all the focus on the US retail sales data coming up later to set the tone for the final two days this week.

This article was written by Justin Low at www.forexlive.com.

The Nasdaq has been on a steady rise ever since the last week’s US Jobless
Claims as the data quelled the fears around the labour market following the
weak NFP report. The “growth scare” triggered by the ugly ISM Manufacturing PMI
and the weak NFP report looks to be behind us for now.

This week we got some more positive news on the inflation front as the US PPI surprised to the
downside and the US CPI yesterday showed some
more easing. That should be good news as the Fed will likely be even more
dovish from now on and the chances of three rate cuts by year-end solidify.

Nasdaq
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Nasdaq broke above the key trendline around the 19000 level this week. This
should give the buyers a bit more confidence to increase the bullish bets into
new highs. The sellers, on the other hand, will want to see the price falling
back below the trendline to regain some control and position for a drop into the
17500 level.

Nasdaq Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a notable support zone around the 18800 level which saw the
bearish momentum increasing on the way down and the bullish momentum increasing
on the way up.

If the price were to fall
back into the support zone, we can expect the buyers to step in with a defined
risk below the zone to position for a rally into the 19727 level. The sellers,
on the other hand, will want to see the price breaking lower to position for a
drop into the 17500 level.

Nasdaq Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish
momentum. The buyers will likely keep on leaning on the trendline to position
for new highs, while the sellers will want to see the price breaking lower to
target a drop into the 18800 support. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the US Retail Sales and Jobless Claims figures. Tomorrow, we
conclude the week with the University of Michigan Consumer Sentiment survey.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

It’s been a bit of a back and forth week for the pair but price action is ultimately looking to settle higher. The pair nudged higher on Tuesday but was dragged back down yesterday despite some dollar softness in play. But after the more solid employment figures earlier here, we are seeing the aussie pull itself back up again.

Coming into this week, the challenge for AUD/USD was to try and break above its key daily moving averages. The 100 (red line) and 200-day (blue line) moving averages are holding close to one another and limited the rises last Friday and earlier this Monday.

Buyers were dealt a bit of a blow yesterday after what looked to be a decent shove higher on Tuesday, closing above 0.6600 as well. But they are getting back on their feet again in trading today at least.

It will be crucial for buyers to secure a close above the key technical region above, now seen at 0.6598-04, to secure a more bullish sentiment once more.

That being said, there is still one more hurdle to get through today. And that is the US retail sales data coming up later.

One can also argue that the 61.8 Fib retracement level at 0.6626 is one to watch. However, I’d be eyeing more closely the key daily moving averages to affirm any bullish bias in the pair for now.

That said, further gains in the pair may be left wanting. It will highly depend on how long can the RBA resist rate cuts for the most part.

On the dollar side of the equation, I would argue that we could see traders slowly conform to a 25 bps rate cut by the Fed next month. If so, there is a pull back in pricing to be seen. And that could limit any outsized dollar weakness at least in the short-term.

That unless markets are convinced that they can bully the Fed into moving by 50 bps in September. But I am holding my reservations as the broader market mood has calmed down since the panic earlier this month.

For some context, traders are still pricing in a ~38% probability of the Fed moving by 50 bps next month. For the remainder of the year, there is ~103 bps of rate cuts priced in with just three meetings to go.

This article was written by Justin Low at www.forexlive.com.

The S&P 500 has been on a steady rise ever since the last week’s US Jobless
Claims as the data quelled the fears around the labour market following the
weak NFP report. The “growth scare” triggered by the ugly ISM Manufacturing PMI
and the weak NFP report looks to be behind us for now.

This week we got some more positive news on the inflation front as the US PPI surprised to the
downside and the US CPI yesterday showed some
more easing. That should be good news as the Fed will likely be even more
dovish from now on and the chances of three rate cuts by year-end solidify.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 reached a key trendline
around the 5500 level. This is where we can expect the sellers to step in with
a defined risk above the trendline to position for a drop into new lows. The
buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into a new all-time high.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a key support
around the 5432 level. If we get a pullback from the trendline, that’s where we
can expect the buyers to step in with a defined risk below the level to
position for a break above the trendline with a better risk to reward setup.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into new lows.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum.
This is where the buyers keep on leaning onto to position for new highs. A
break below the trendline should see the sellers piling in and target the 5432
level where we will likely find the dip-buyers. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US Retail Sales and Jobless Claims figures. Tomorrow, we
conclude the week with the University of Michigan Consumer Sentiment survey.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Headlines:

• UK July CPI +2.2% vs +2.3% y/y expected
• Traders now see BOE decision in September to be a coin flip
• The kiwi is the main mover today amid dovish RBNZ
• What are the distribution of forecasts for the US CPI?
• US CPI data due Wednesday, the ranges of estimates (& why they’re crucial to know)
• What is the market pricing for the Fed ahead of the US CPI report later?
• France July final CPI +2.3% vs +2.3% y/y prelim
• Eurozone Q2 GDP second estimate +0.3% vs +0.3% q/q prelim
• Eurozone June industrial production -0.1% vs +0.5% m/m expected
• US MBA mortgage applications w.e. 9 August +16.8% vs +6.9% prior

Markets:

• EUR leads, NZD lags on the day
• European equities higher; S&P 500 futures flat
• US 10-year yields down 2.3 bps to 3.831%
• Gold up 0.3% to $2,471.93
• WTI crude down 0.3% to $78.10
• Bitcoin up 0.7% to $60,982

It was more of a placeholder session in European morning trade today, as all eyes are on the US CPI report coming up later.

We got inflation numbers from the UK and they were softer than estimated, bolstering expectations for a BOE rate cut next month. The market pricing briefly jumped to near 50-50 before settling down a little bit. Now, traders are seeing ~42% odds of a rate cut as compared to ~36% before the report.

GBP/USD dipped lower initially down to 1.2820 but is now trading back to 1.2840, lower by just 0.1% on the day.

There wasn’t much action in the major currencies space with most dollar pairs relatively muted as traders await the main event later in US trading.

EUR/USD did nudge up a little to 1.1020 from around 1.0990 earlier in the session, with buyers eyeing a firmer break above 1.1000. There are large option expiries at 1.1035 to be mindful of as well.

The kiwi is the weakest performer, owing to a more dovish RBNZ which cut interest rates earlier in the day. NZD/USD remains down 1% at 0.6015, not much changed since Asia.

In the equities space, European stocks are slightly higher while US futures are more muted as the risk mood keeps more tentative for the time being.

It’s over to the US CPI report to see how that will shape things for the remainder of the week now.

This article was written by Justin Low at www.forexlive.com.